Tuesday, March 01, 2011

Here We Go Again!

After campaigning in 2010 against the referendum to raise sales taxes in Watauga County a quarter-cent, the three Republican commissioners voted this morning to submit another referendum to the public to raise sales taxes in Watauga County a quarter-cent.

The vote was 3-1, with Tim Futrelle the lone vote against. Commissioner Jim Deal was absent.

The referendum will be held May 17. The election itself will cost the taxpayers approximately $25,000 - $30,000 ... same as the last sales tax referendum.

Remarkable the speed with which the resolution to call for this vote was conceived, developed, and acted on. The very first public utterance about a sales tax increase occurred near the end of the commissioners' pre-budget retreat on Saturday. By this morning, research had been completed on the scheduling of such a vote, and the resolution language had been drafted.

Speed is of the essence, obviously. If the referendum passes on May 17 and is certified, it will still be October 1, 2011, before the first collections can begin. As it is, and if the referendum passes, the county can only hope for additional revenue during eight months of FY2012.

The projected revenue to be raised for those eight months: $1,160,000.

The discussion focused on (a) the commissioner's unhappiness at having to do this and (b) blaming the new high school for the necessity. They put it in their resolution that the new sales tax referendum would be devoted exclusively to debt service.

FURTHER NOTESCommissioner Vince Gable once again brought up his preference for a land-transfer tax, but legislation is already introduced in Raleigh (which will probably pass) to rescind the ability of counties to pass such a tax.

Food and medicine will be exempt from the sales tax increase.

Waiting until the second meeting in March to pass the resolution would cost the county three more months of revenue ... because of tricky timing issues.

Commissioner David Blust: If we don't pass this tax, then we're looking at a property tax increase or many more firings of employees.

Vince Gable: I know I'll get some grief over this for a "flip-flop on taxes, but it's apples and oranges, what the money will be used for versus the last referendum. I don't like spending the $30,000 on the election.

Nathan Miller: We're going to throw this up there and let the people decide.

David Blust: Our backs are against the wall.

Tim Futrelle: We found a way to balance the budget for the last three years without doing something like this.

32 comments:

Anne
said...

What a freaking joke this is. As someone said down thread, at least with the referendum back last year, we'd have something to show for the money. Now we're asked to vote for the same tax increase to throw the money down a rat hole--we get nothing for it. Here's betting the commissioners will even abandon the county pool to boot.

I don't buy that the school is what has put us here. We are paying for the school through a separate property tax. It's classic. The so-called fiscally responsible republicans can't find their way out of a paper bag.

Willaimson once again lies by omission in his reporting. He fails to mention that the county staff told the Commissioners that it would cost the county $700,000.00 if they waited to hold a public hearing without calling for the special election at this time due to timing constraints. H also neglects to point out the difference between a sales tax being approved to reduce the debt and being used as a means to provide a basis to borrow even more money for a recreation center. The commissioners talked about this at lenght. They also talked about how many of those opposed to the sales tax the first time were against it for that very reason and that many of them would support it for the purposes of bet reduction.

Many people made this point at the first public hearing as those of us that wee there can attest.

The commissioners are going to spend $30,000.00 on basically an option for the tax payers to decide if they want to approve this sales tax at the current time rather than it costing the county $700,000.00 if the people decide to do it later. Again, this is vastly different than the previous Commission spending $30,000.00 on an election because they thought it would pass more easily in a special election than if they waited about two months and had it during the general election for a fraction of the cost and without having to take into account what amounts to hundreds of thousands of dollars in waste.

The Commission is going to provide a public hearing before the election in order for both sides to present their arguments. Then the election will decried what the people want. The sad thing is that Williamson cannot understnad the difference between a sales tax for debt reduction and spending money you do not have for things you can get by without until you can afford them.

Yep, the previous county found a way to get by without raising the sales tax. Simple, they just borrowed money and took the county debt from 20 million dollars up to over 100 million dollars.

We could just keep borrowing and not have to collect taxes....except that someday we will have to pay it back.

Guess what, someday is almost here. Running up 100 million dollars in debt in 2 short years and continued spending because nobody had the political will to do the responsible thing, is what got us in this mess.

All you Deborah Greenes and Not Deborah Greenes throw around numbers so very freely, it makes me wonder.

According to people who actually work in county government, the total county debt is roughly $30 million less than you're alleging ... which sorta throws a lot of your name-calling and blame-affixing into question.

There is actually something in what Commissioner F is saying. The question; does he know what has been going on or does he only know that they have managed to balanced the budget? What is going on? Consider this point first: Last year a budget was submitted with expenses and income balancing. However, there were many budget amendments for the $10 million worth of non-budgeted items. So where did the money come from for the non-budgeted items (the items that they like to expend money on and not make the public aware of up front)? It didn't come from that "rainy day" or "slush" fund because it only went down by approximately $1 million. Now lets go back 2 years. The same thing. However, the non-budgeted items were less than $10 million and the "rainy day" or "slush" fund grew. How does the "rainy day" or "slush" fund grow when you have millions of dollars of non-budgeted items. The answer is in the budget. It is padded. The over estimate the expenses and under estimate the revenues. They have millions extra. Since Commissioner F has made this astounding revelation and it seems he is able to speak volumes when Commissioner D is not around. I offer this challenge to Commissioner F: Find out why you have been able to manage to balance the budget without raising taxes over the past years and share it with the public and take that giant leap - take that pen out and give us a copy of the real budget! This is your chance to shine Commissioner F! You have dared to say what needed to be said. Now finish it.

I am loving all the Teahadists coming on here now and trying to find ways to explain (1) why they have to raise taxes now that they have been in office for TWO MONTHS and (2) why it's so different this time ("we are raising taxes for not one damn thing; they were raising taxes for a new rec center.")

"Find out why you have been able to manage to balance the budget without raising taxes over the past years and share it with the public and take that giant leap - take that pen out and give us a copy of the real budget!"

So, Deborah. Now you saying there is a "secret" budget? Jesus.

The Dems don't have to share their magic of balancing budgets with the deadbeats on the current board. I mean, these republicans said they could do it better, that they would cut all the fat out of the budget, that Democrats didn't know a thing about managing money.

I would like to know if you are going to fight this tax increase referendum like you did the last one. I was opposed to the last one and I am JUST as opposed to this one. As you and others said during the recreation referendum, there are a lot of people hurting right now, and it is absolutely the wrong time to raise taxes. I am interested to see if you are as committed to principle.

The audit says the legal debt limit for Watauga is over $689 million. The county's debt service as of June 2010 was just under $80 million. The county's assets, however, exceed the liabilities by over $68 million.

The point our leftist friends is missing is that delaying the action could cost the county $700,000.00 IF the citizens vote to pass the referendum. The citizens get to decide if there will be even the possibility of this tax being created. The difference is the reasons for the tax and the referendum. Last time it was done slightly before a general election because the previous commission thought it would be easier to pass when fewer people would be voting. The purpose was to secure a loan for a recreation center that would have increased the county"s debt. This time the purpose of the tax is to pay down the huge debt created by the previous commission. The timing is in order to save the county a net of about $670,000.00 dollars IF he people approve the loan.

This issue illustrates how the excess of the previous commission is going to have an adverse effect on the present commission as it struggles to pay for the loans taken to waste money by the previous commission.

Mr, Gable was incorrect in one way. The comparison is not apples to oranges. It is apples (the current commission) to horse apples (horse manure) (the previous commission).

1) Every GOVERNMENT EXPENDITURE has to be appropriated.2) If the EXPENDITURE is not budgeted, then you have to do a BUDGET AMENDMENT.3) The CAPITAL EXPENDITURES that are not budgeted for come from the GENERAL FUND by way of a BUDGET AMENDMENT (transfer from the general fund to the capital fund).4) The County didn't budget for furniture for the high school, the construction over runs, etc. We are talking about $10 million non-budgeted. 5) The GENERAL FUND represents the budgets of the various departments of GOVERNMENT.6) If these NON-BUDGETED EXPENSES came from the GENERAL OPERATIONS BUDGET, then the GENERAL OPERATIONS BUDGET is PADDED.

THE SIMPLE TRUTH IS:

1) A SALES TAX REFERENDUM IS NOT NECESSARY.

2) A PROPERTY TAX INCREASE IS NOT NECESSARY.

3) A CUT IN THE PADDED BUDGET IS THE ANSWER!

4) THE COUNTY MANAGER HAS BEEN DOING THIS FOR YEARS WITH COMMISSIONER DEAL.

5) THE COUNTY MANAGER NEEDS TO BE REPLACED IMMEDIATELY!

AND FOR THOSE WHO ARE INQUIRING; THERE ARE OVER 200 SIGNS FROM THE LAST REFERENDUM IN THE BARN READY AND WAITING.

Commissioner Deal set the stage. He lamented on how much the Finance Director has cut the budget during his tenure. Problem is everyone believes his CRAP. Then in comes the dire warnings of untold millions of STATE MANDATES being pushed down to the local level. The commissioners don't want to raise property taxes so they want another option. The SIMPLE TRUTH:

1) They trust Commissioner Deal too much.

2) They trust their Staff too much.

3) The MONEY is there and has been for years. Commissioner F said it best when he voted NO on the sales tax and said "We've always managed in the past."

TELL THAT COUNTY MANAGER YOU WANT A 10% BUDGET CUT. ANYTHING ELSE, TAKE IT OUT OF THE "SLUSH FUND" OR "RAINY DAY FUND"! IF THESE ARE NOT RAINY DAYS THEN WHAT ARE RAINY DAYS. PUT YOUR BIG BOY PANTS ON!

FWIW, I seem to remember some of the people who objected to the tax increase at that public meeting in the courthouse worried out loud that the money might go to debt reduction and not a rec center. At the time I recall thinking that I personally would have supported the tax increase then if it was for debt reduction and I had trouble understanding their position.

I'm still okay with a tax increase for debt reduction, but both sides on the commission trouble me: the Republican switch for the reasons JW says, but also the Democrats for being willing to raise taxes in order to borrow more money last year, but unwilling to raise taxes to pay off the debt.

Do they (and commenters like Anne and Larry) think Obama's Magic Unicorn is going to come pay off our debt for us? So much for the "reality-based community's" tenuous connection with Planet Earth.

Now run an amortization schedule on $25 million for 18 years at 3.49% interest and you will get the interest on the $25 million loan that converted from principle only to interest and principle after 6/30/2010.

Go to the website Anne provided and look at page 58. Go down to total expenditures. The first column is the budget, the second column is the actual, the last column is the padding - $5 million! So a 10% cut will take care of the current projected $2.5 to $4 million with some to spare.

This is what I've often wondered: if Deborah Greene is so smart and knows how to pay off the county debt and "clean up" the government, then why the heck hasn't she run for county commissioner? Surely she'd be elected in a landslide, right? Then she could show us how it's done! :-)

1) Deborah Greene is not the only person with the answer. Many others think the same and maybe have even other suggestions. We just don't hear from them.

2) A padded budget is carried forward as the starting point for the next year. According to the audit report, page 58, it was padded by 10%. So start with a 10% budget cut.

3) Commissioner Deal claimed that there were 3 bona fide offers; then he later stated that there were never any real offers on the old high school property. He also took $2.5 million from the "slush fund" when he was first elected to buy a problem piece of property from one of his clients. And, we know what spin he put on that - we needed it to renovate the high school because we couldn't afford to build a new one (that was when he was spinning economic woes; this soon turned to leveraging the "rainy day-slush fund"for the benefit of the RAT PACK. The simple truth is that $2.5 million that he wasted would have cured the lower end of the budget woes estimate we are experiencing now. Commissioner Deal said that land was worth way more than that so start the auctioning at $2.5 million. The school board has been hiding the appraisal on the old high school; however, they forgot or were not in office when it was announced in the paper that they had an appraisal for $15 million. So start the auctioning there on the old high school property and that would get us a total of at least $17.5 million to pay down the debt. That would reduce the debt payment which is part of the budget woes.

"To address some specific points of Ms. Greene's letter; regarding the Smitherman/Winkler property purchase, I am of the opinion that if the acreage was placed on the market today, it would bring $3.5M or more. The current plan for this parcel is to be included with the adjacent high school property and sold once the new high school property is occupied. It is anticipated that the County will net $33 million or more from the sale of these two properties."

Here is an old letter to the editor. Not sure it ever got published; it explains it all. This is how they have managed (remember Commissioner F's statement?)

King Street Math

It was while listening to Jonathan Jordan’s explanation of “Raleigh Math”, I realized the county has its own version, “King Street Math”.

1) Budget less income, come in over budget. Call it “conservative”

2) Budget more expenses, come under budget. Call it “frugile”.

3) Don’t budget unpopular expenditures. Call it “opportunities”.

4) Use budget amendments for unpopular expenditures. Call it “necessities”.

5) Grow the “slush fund”. Call it “emergency fund”.

Where did the money come from to pay the unbudgeted $5 million for the furniture and fixtures for the new high school; where did the $9 million in construction over runs come from; where did the money for the bike trail property come from; where did the architectural fees for the recreation building come from and so on and so on? This has been going on for years. Despite all of the unbudgeted “necessities and opportunities”, King Street has managed to grow the “slush fund” from $10 million to $17 million.

Commissioner Winkler credits it to “budget cuts”. So, you budget excess departmental expenses, you spend less than budgeted, you replace the gap with “opportunities”, you grow the “slush fund” and you call this process “budget cuts”.

Commissioner Winkler takes credit for an increase in net assets. So, the school board gives you the old high school property decreasing their net assets while increasing the county’s and you call it sound financial policies.

Commissioner Winkler defends the County’s ability to borrow for the recreation center using Moody’s rating. According to Moody’s opinion: “Moving forward the county has no additional borrowing plans, having just done a $70 million bank loan (included in the debt burden) to finance school projects, and as such we expect that the average direct debt burden (1.1% of full value) will decline.” The Finance Director admitted she hadn’t seen Moody’s opinion. Obviously, Commissioner Winkler hasn’t. Moody also expects you to maintain that “slush fund” balance.

You use “King Street Math” to support your extravagant spending and fleece the citizens. it will catch up with you. It is the citizens who demonstrated common sense by voting down the tax increase and subsequent borrowing. And, while you are fixed on the County’s legal $600 million borrowing capacity, we have the common sense to know we can’t afford it. And, while we are not given the opportunity to vote on every debt you incur, you remind us we do have the opportunity to vote you out of office. And, we have the common sense to do that too!

Rocky Nelson's response was to this statement in Deborah Greene's letter to the local government commission:

"We have heard that the existing high school site will be sold when the new on is finished. We have heard that we will get in excess of $30 million to apply against the debt service. However, the school board attorney says the existing site appraised for $18 million (the appraisal is not public record because the school board attorney paid for it out of his pocket for some unknown reason; bids made on the school site have not been made public either without explanation). We are not even sure that the bids exist. For all we know, they could have been fabricated to come up with the selling price. We also understood that the bids were pulled because the Town of Boone would not ok the proposed projects. However, the Town of Boone does not recollect anyone to date approaching them about any proposed projects. New zoning and slope laws have been implemented, since the original bids, to guarantee the use of the existing site is further limited. The Town of Boone has made it clear that big box retail stores do not fit into their comprehensive plans and fail to meet their Unified Development Ordinance. So, how much is the existing high school really worth?"

He started his letter with: "In that the spiteful personal attacks enumerated in the above referenced letter are purely political and erroneous, no response is needed; however, please accept the following facts regarding the high school projects."

"The current plan provides for $70,000,000 package with includes a $25,000,000 short-term loan, three-year loan. The intent is to retire the debt with proceeds from the sale of the existing high school that has a current asking price of $36,000,000. However, in developing a conservative debt service plan, $25,000,000 from the sale was projected. In the unlikely event that the property does not sell within the three-year period, the Commissioners are prepared to adopt a .02 cent tax increase to handle the debt."

about

J.W. Williamson was the founding editor in 1972 of the Appalachian Journal: A Regional Studies Review, which he edited until July of 2000. He has taught college classes in Appalachian history, cultural politics, and literature, and he has lectured widely on the pop-culture history of "Appalachia" in the American consciousness. His books include Interviewing Appalachia, Southern Mountaineers in Silent Films, and Hillbillyland: What the Mountains Did to the Movies and What the Movies Did to the Mountains. He has won the Thomas Wolfe Award given by the Western North Carolina Historical Society, the Laurel Leaves Award given by the Appalachian Consortium, a special Weatherford Award given by Berea College, and the Cratis Williams-James Brown Award given by the Appalachian Studies Association.

The views expressed on WataugaWatch are solely those of J.W. Williamson or individual contributors and are not necessarily shared nor endorsed by the Watauga County Democratic Party nor by any other adults of sound mind in this or any other universe.